Putin’s useful connections

WESTERN governments are spluttering with indignation following Russia’s invasion of Ukraine’s Crimean peninsula – but in an interconnected world, spluttering may be their only response. US president Barack Obama promised “consequences”, and European Union foreign ministers have rushed to emergency meetings. “But there’s nothing we can do,” says Keir Giles  of Chatham House, a think tank based in London. The main obstacle to any Western military action might seem to be Russia’s sheer size and its 1300 nuclear warheads. Moreover,  such a confrontation would derail US-Russian cooperation on Iran, Syria and Afghanistan. However, analysts say global economic links are the chief stumbling block to any substantial Western measures. For example, Sevastopol, the Crimean town which is the main port for Russia’s Black Sea fleet, is also vital for grain shipments. Ukraine is the world’s sixth-largest exporter of wheat and fourth-largest of maize. Disrupting that with military action  or a blockade would destabilise grain prices, causing political unrest worldwide. Wheat and corn prices have already jumped. Economic responses such as sanctions are unlikely. The EU, especially Germany, relies on Russia for 30 per cent of its natural gas,  says Anders Aslund of the Peterson Institute for International Economics in Washington DC, and Russia controls the pipelines. Russia, in turn, needs the $100 billion Europe pays annually for its gas. Who would blink first? With no sanctions on the EU agenda, there seems little appetite to find out. Rich nations could try to block Russian president Vladimir  Putin’s wealthy supporters from accessing the world’s financial markets. “That would hurt us more than it hurts them,” says Giles. The UK’s trade surplus with Russia brings in much-needed income. Some  banks benefit from the $56 billion that flows out of Russia yearly.  They are part of a coupled system  on which most of the world’s economy depends. If we are all interconnected,  don’t Russia’s actions hurt it as much as everyone else? Giles sees no downside for Russia, or any obvious way to enforce rules against territorial incursion without major repercussions elsewhere.